Japan to promote green finance with common platform and scenario analyzes

A man wearing a protective mask walks past the Bank of Japan headquarters amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS / Kim Kyung-Hoon / File Photo

  • FSA and BOJ to conduct scenario analyzes on banks and insurers
  • FSA to work with Japanese stock exchange on common green bond platform
  • Measures follow BOJ’s plan to increase funding for the fight against climate risk

TOKYO, Sept.1 (Reuters) – Japan will step up efforts to promote sustainable finance, including fueling its green bond market and analyzing the resilience of financial institutions to climate risks, in line with the government’s new regulatory guidance.

Together with the central bank, the Financial Services Agency (FSA) will perform scenario analyzes on Japan’s three mega-banks and the three major non-life insurers to measure their resilience to the risks posed by climate change.

The analyzes will be based on common climate risk scenarios and conducted as a pilot exercise until June of next year, Japanese financial regulator FSA said in its regulatory guidance for fiscal year 2021 released on Tuesday.

Japan will also implement a green bond certification program and work with Japan Exchange Group – the operator of the Tokyo Stock Exchange – on a common platform that issuers and investors can leverage to obtain information on bonds. green, according to the directive.

“It is important to create an environment in which market participants can smoothly and precisely make investment decisions that contribute to decarbonization,” said FSA.

These measures follow the Bank of Japan’s decision in June to increase funding for climate change efforts. Read more

“There are areas of finance where the BOJ can play a role in the fight against climate change,” BOJ Deputy Governor Masazumi Wakatabe said at a press conference on Wednesday. Read more

“Tax incentives, subsidies and rule-making are areas that are the responsibility of government and regulators,” he said, adding that a “division of labor” was crucial for policymakers to cope. the growing economic impact of climate risks.

Japan is one of the most disaster prone countries in the world and has been hit hard by climate change, with flooding claiming many lives every year.

Prime Minister Yoshihide Suga last year set a goal of making the country carbon neutral by 2050, aligning it more with other countries as global attention on climate change intensifies.

Japan’s green bond market is growing but remains small, accounting for around 775 billion yen ($ 7 billion) of the $ 300 billion global market for such assets.

($ 1 = 110,1000 yen)

Reporting by Leika Kihara; Editing by Christopher Cushing and Hugh Lawson

Our Standards: The Thomson Reuters Trust Principles.

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